ASEAN-CHINA

MALIT, AZEL RUTH B.

INTRODUCTION
China’s relationship with the Association of Southeast Asian
Nations (ASEAN) has seen its ebbs and flows. Historically, China
considered ASEAN as an instrument designed to “encircle China”
and therefore kept a safe distance from the regional body. As China
started to develop its economy beginning in the 1980s under Deng
Xiaoping, and in the following decades harboured ambitions for a
global role, it realised that it needed to first achieve dominance
regionally, close to home. As Yuen Foong Khong, Professor at the
Lee Kuan Yew School of Public Policy, once wrote, “Asia is where
China must establish its prestige or “reputation for power.”[ In the
1990s, Beijing opened up, “to seek the settlement of divergences
and disputes among nations through peaceful means.
INTRODUCTION
• China positioned its approach to regionalism in terms of its
aim for a “peaceful rise”
• In 1991 ASEAN and China began a dialogue process
• in 1996, China became a full dialogue partner of the regional
body.
• As the financial crisis hit Asia in 1997, China decided not to
devalue its international currency, the Renminbi (RMB) and
also to financially support the most crisis-ridden countries like
Thailand, with over USD 4 billion in aid through either the
IMF framework or bilateral channels, as well as Indonesia in
the form of export credit and emergency medicine. The same
year saw the first informal ASEAN-China summit in Kuala
Lumpur, during which the leaders of both sides decided to
create “a 21st century-oriented partnership for good
neighborliness and mutual trust between ASEAN and China.
INTRODUCTION
• China actively engaged itself in various ASEAN-led institutions
including the ASEAN Regional Forum (ARF), ASEAN plus One
(China), ASEAN plus Three (China, Japan, South Korea), and
the East Asia Summit.
A ‘21ST-CENTURY PARTNERSHIP’

China and ASEAN began the 21st century with active engagement.
In 2003, China acceded to the Treaty of Amity and Cooperation in
Southeast Asia, leading the way among all of ASEAN’s dialogue
partners. (The relationship between them was upgraded to
“strategic partnership for peace and prosperity), in the same year,
and by 2005, some 46 mechanisms at various levels in 16 fields,
including 12 at the level of ministers, had been established
between ASEAN and China. In 2008, China sent its first
ambassador to ASEAN, and in 2011, the ASEAN-China Centre
(ACC) was established in Beijing. In 2012, China established its
Permanent Mission in ASEAN.
A ‘21ST-CENTURY PARTNERSHIP’

The second decade of the new century was marked by the

anniversary celebrations of the ‘dialogue partnership’ and the
‘strategic partnership’. President Xi Jinping, during his visits to
Indonesia and Malaysia in 2013 spoke about “a closer ASEAN-
China Community with a Shared Future” and the Maritime Silk
Road of the 21st century. Almost each year of the decade was
marked by some important collaborative event.

Over the years, China has made a sustained effort to project its
power in the region through Track-II diplomacy. In aiming to
create an alternative architecture of rules and institutions in
Southeast Asia, China is not merely focusing on economic
development and relations in the arena of non-traditional security
in the region, but also on developing shared beliefs and norms
that will build what its leaders often identify as a “community of
shared destiny.
IN THE ERA OF US-CHINA TRADE WAR

In response to US trade policies under former President Donald

Trump and especially in the first year of the Covid-19 pandemic,
China looked to other regions, most notably to Southeast Asia,
with which to reinforce engagement in trade. Indeed, ASEAN has
replaced the US as the second largest trading partner of China
after the EU. In the first quarter of 2020, ASEAN-China trade
increased by 6 percent year-on-year to US$140 billion, accounting
for 15 percent of China’s total trade volume. China’s imports from
Vietnam and Indonesia rose by 24 and 13 percent year-on-year,
respectively.
Other sectors where China is looking to engage the ASEAN
countries more actively include trade in agricultural commodities,
and tourism. China expects the ASEAN industrial sector will
further benefit from post-Covid-19 resetting of China’s
consumption expenditure and more in-depth coordination
between them will result.
IN THE ERA OF US-CHINA TRADE WAR

China is also eyeing to play an active role in promoting digital

connectivity in ASEAN. Companies like Alibaba and Huawei are helping
to promote online trading and AI innovation in ASEAN member
countries. Through its “Digital Silk Road”, China aims to build the
backbone for much of the digital infrastructure across Central and
Southeast Asia.
ASEAN’S RESPONSE

According to China’s pronouncements, the core of its regionalism

strategy is “to secure a peaceful environment”—both regional and
global, so that it could focus on its own economic development.
The fact is that beginning in the mid-1990s, China has
endeavoured to integrate the Southeast Asian region with itself at
its centre. It has extended economic assistance to countries like
Indonesia, Cambodia, Laos, Malaysia; and it has exported arms
cheaply to the region. Between 2012 and 2018, Beijing upgraded
its bilateral relations with almost all ASEAN member-states to
either ‘strategic cooperative partnership’ or ‘comprehensive
strategic cooperative partnership’
ASEAN’S RESPONSE

Whether China will become the dominant power in the Southeast

Asian region will depend on whether the states in the region come
to believe that depending on China for both development and
security is what they should strive for, or alternatively, if the US
decides to withdraw from the region. The following paragraphs
take a closer look at the responses of ASEAN member countries so
far
TAKE A CLOSER LOOK AT THE RESPONSES OF ASEAN MEMBER
COUNTRIES SO FAR;

Thailand
Thailand does not consider China as a security threat.
Despite China’s damming of Mekong having affected
its agriculture, and its negative annual trade balance
with China, Thailand’s military and royalist elites view
China as a friend of Thai autocracy. The Thai
government is keen to get China’s assistance in
securing 5G technology and AI support for enhancing
its surveillance capabilities.
The Philippines

The US’ relationship with the Philippines, which is

historically a close Washington ally, is going through a
churn. While the ministers in the Philippines
government, as well as the general public, are wary of
China’s expansive activities in the South China Sea at
the expense of the Philippines’ territorial claims,
President Rodrigo Duterte is determined to bring the
country closer to China. In early 2020 he terminated a
key military pact with the US, the Visiting Forces
Agreement, which is the foundation of the long
relations between the two countries.
Indonesia
Indonesia—a country which has strategic partnerships
with both the US and China—has come closer to China.
This was especially true during the first year of the
COVID-19 pandemic, when China offered Indonesia
financial and health-related aid. At the same time, US-
Indonesia trade has stagnated over the past several
years, hovering around the USD 30-billion mark.
Malaysia
Malaysia’s position is arguably weaker than
Indonesia’s. Despite China’s regular presence on
Malaysia’s maritime economic zone, Malaysia has
avoided a confrontational posturing. On economic
issues too, it has deepened its relations with China and
welcomed Huawei’s 5G network. It has chosen to not
comment on China’s treatment of the Uighur Muslims.
On this the Malaysian political elite is trying to walk
the narrow path between meeting domestic public
pressure and displeasing China by refusing to send
back the Uighur refugees despite the latter’s request.
Vietnam
Vietnam fought a war with China in 1979; it has
maritime disputes with China as well. Its long and
complicated history with China is characterised by
distrust and fundamental differences despite
ideological and regime similarity. Disputes over
Spratly and Paracel islands have proved to be difficult,
and both consider the South China Sea as their core
interest. Yet Vietnam has to deploy diplomatic skill,
and however much it can use the “comradely and
brotherly” relations between the Chinese and the
Vietnamese communist parties, to manage its relations
with the giant neighbour.]
Cambodia
One of the ASEAN countries closest to China is
Cambodia, often accused of kowtowing to China. Its
economic, military, educational and cultural relations
with China are robust. It has deep penetration of BRI
projects. It considers its China debt as “manageable”
and downplays the South China Sea issue within
ASEAN forums.
Laos
Laos, which has a history of close friendship with Vietnam, was
put in a difficult situation during the China-Vietnam war at the
end of the 1970s. From the early 1990s, Laos began repairing its
relations with China and today, those efforts have come to fruition
in economic and infrastructure terms. BRI projects are developing
fast in Laos, and the two countries are committed to building a
“community of shared future”. Laos is one of the countries in the
region with the highest amounts of loans from China. Laos also
underplays the South China Sea dispute within ASEAN.
Myanmar
China has strong presence in Myanmar in terms of
trade, aid and investment, and infrastructure, stepping
up the China-Myanmar Economic Corridor as BRI
project. Chinese presence is also visible in port,
railways and hydropower projects. Myanmar, after all,
is a critical pathway for China to access the Bay of
Bengal. Myanmar, for its part, needs China’s
cooperation in bringing a number of powerful
separatist outfits to the negotiating table. However,
Myanmar has retained a deep distrust of China across
a succession of Myanmarese regimes. At the same time,
it has a troubled relationship with the US as well,
which placed Myanmar under strict sanctions regime
for violations of human rights by its military rulers.
Brunei
China’s relationship with Brunei is less problematic than those
with the other ASEAN countries. Brunei gets the sort of
investment it needs from China, like in infrastructure, oil refinery,
telecommunications and aquaculture. Brunei is also a member of
the AIIB. Most importantly, Brunei is the only ASEAN country
which has reached a consensus with China on how to address the
areas of the South China Sea that both countries dispute.
Singapore
Singapore, of all the Southeast Asian countries, more
explicitly tries to navigate between the US and China.
For Singapore, the US is a “resident power with vital
interests in the region”, while China “is a reality on the
doorstep.” Singapore, in the words of its Prime
Minister Lee Hsien Loong, “does not want to choose
sides between the US and China.” He resents US
withdrawal from TPP just as he wants bipartisan
understanding in the US on China policy.
 ASEAN-CHINA FREE TRADE AREA

The ASEAN-China Free Trade Area (ACFTA) was signed in 2004 and was
implemented in July 2005.
Through this FTA, China has consistently ranked as ASEAN’s largest
investor over the last decade, with total trade of over US$731 billion in
2020.
The FTA reduced tariffs on more than 7,000 product categories — or 90
percent of imports — to zero by 2010, although initially only applicable to
Indonesia, Malaysia, Singapore, Brunei, the Philippines, Singapore, and
Thailand. The remaining ASEAN members (Myanmar, Laos, Vietnam, and
Cambodia, followed suit in 2015.
 ASEAN-CHINA FREE TRADE AREA

In 2019, ACFTA was upgraded to simplify rules of origin (ROO), trade

facilitation measures, investment procedures, and customs procedures.
Under the amendment, there are multiple ways in which the ROO is
decided:
The origin of the goods is deemed according to the country they were
produced or obtained;
However, if the goods were obtained from multiple countries, the regional
value content (RVC) must be at least 40 percent of the value of the goods,
and the final process of production must be done in a country that is a
member of the FTA; and
Various Product Specific Rules was introduced to clarify goods that have
undergone significant transformation in the tariff classification or supply
chain.
 ASEAN-CHINA FREE TRADE AREA

In Q1 2020, ASEAN overtook the EU to become China’s largest trading

partner, increasing year-on-year to US$140 billion and accounts for 15
percent of China’s total trade volume. This comes as China’s traditional
largest trading partner, the EU, went under extensive lockdown.
Electronics were the biggest contributor to this trade, with China
importing US$14.9 billion worth of integrated circuits, such as
microprocessor chips, analog-to-digital converters, and chip capacitors
from ASEAN countries.
Certification Rules
General Description ACFTA adopts a government-certification system
only. Under ACFTA, certificates of origin (CO) must be issued by the
government authorities of the exporting Party. Provisions for COs
under ACFTA are detailed in Rules 1 to 22 in Attachment A to Annex 3
of the OCP. The importer must present the CO (Form E) to qualify for
preferential treatment at the time of importation. Before exportation,
the exporter should submit a written application for the CO together
with proper supporting documents proving that the products to be
exported qualify for the issuance of a CO. Form E is valid for 12 months
and for a single shipment. An importer does not need to use Form E for
shipments equivalent to USD 200 and should use a simplified exporter
declaration instead.
Back-to-Back Certification of Origin
Currently not applicable under ACFTA; however, in August 2009 China
finally agreed with ASEAN to accept the back-to-back CO process. China
notified that it had some technical problems with the use of the term
“back-to-back" and proposed the term "movement certificate" instead.
The new term will be used in the Form E once the revised OCP enters into
effect on June 1, 2010. ASEAN members agreed to modify the term used
on their respective CO Form Es in accordance with China's proposal to
avoid confusion among traders.

Third-party Invoicing
Currently not applicableunder ACFTA; however, after a series of
negotiations, China agreed with ASEAN to accept the process. Exporters
and/or producers can utilize the process after June 1, 2010. Advance
Rulings Currently not applicable under ACFTA.
Post-Exportation Examination
Currently not applicable under ACFTA; however, relevant provisions will be
included in the revised OCP, which is scheduled to take effect on June 1,
2010.

Document Retention Requirements

Authorized authorities must maintain records relating to the goods origin
for at least two years from the CO issuance date.
CMO-27-2004

Consolidated Procedures in the issuance of

Certificate of Origin (CO) With or Without
Preferential Tariff Treatment, and the conduct of
Retroactive Verification (on CO-Form D and Form
E) by the Import Group.
OBJECTIVES

1. To consolidate and simplify the existing procedures in

the issuance of Certificate of Origin (CO), with
preferential tariff treatment, (GSP Form A, ASEAN-CEPT
Form D and ASEAN-CHINA Free Trade Area (ACFTA)
Form E, and without preferential tariff treatment or CC for
General Merchandise (White CO)
2. To plug loopholes in the system and prevent the use of
spurious documents.
3. To serve as exporters guide, and encourage export-
oriented industries to avail of the preferential treatment
under the simplified procedures in the issuance of CO
GSP Form A/ASEAN CEPT Form D / ASEAN-CHINA FTA
Form E.
4. To verify imported goods covered by CO Form D and
Form E ASEAN Member States, as to weather or not they
satisfy the conditions under the Rules of Origin of
ASEAN-CEPT and ACFTA, respectively.
OBJECTIVES
Definition of Terms/Administrative Provisions:
1. Preferential Tariff Treatment under the GSP, the ASEAN
CEPT and ACFTA Schemes are systems whereby reduced
or total elimination of tariff are granted.
1.a) For GSP- by the importing developed countries (known
as preference giving or donor countries) to certain eligible
products exported by the Philippines as a beneficiary
country.
GSP Form A shall be issued for products that are eligible under the
GSP Scheme and are destined to either of the following countries:
Australia Estonia
Switzerland New Zealand
Turkey
Norway
Japan
People s Republic of Bulgaria
Czechoslovak Socialist Republic
Hungarian People s Republic
Polish People s Republic
Union of Soviet Socialist Republics
EUROPIAN UNION:
Austria Italy
Belgium Luxembourg
Denmark Netherlands
Federal Republic of Germany Portugal
France Spain
Greece Sweden
Finland United Kingdom
Ireland Including French Overseas
For Canada and United States of America (USA), the
issuance of Form A is covered by the guidelines under CMC
No. 182-96 dated April 16, 1966 and CMC 170-2000, dated
April 10, 2000, supplemented by CMC No. 240-2003 dated
July 7, 2003, respectively.
1.b) For ASEAN CEPT- among the ASEAN Member to certain
eligible products exported by the Philippines, as signatory
and regional member thereof.
ASEAN-CEPT Form D shall be issued for products that are
eligible under the ASEAN CEPT scheme, and is destined to
either of the following countries:
Brunei Darussalam Philippines
Cambodia Singapore
Indonesia Thailand
Lao PDR Vietnam
Malaysia
Myanmar
1.c) For ASEAN-CHINA Free Trade Area (ACFTA)- among the
ASEAN Member States and the People s Republic of China to
certain eligible products exported by the Philippines, as
signatory and member thereof pursuant to the Framework
Ageement on Comprehensive Cco-operation.

Member States which accept Form E for the purpose of

preferential treatment under the ACFTA are:
Brunei Darussalam China
Indonesia Malaysia
Myanmar Singapore
Thailand
Cambodia
Lao PDR
Philippines
Vietnam
2. CO for General Merchandise (White CO)- shall be issued
for products that do not qualify or not eligible under the GSP
of the ASEAN-CEPT scheme, or any other schemes with
preferential tariff treatment.

3. To qualify for GSP treatment:

3.a) The product must be included in the GSP product list of
the importing preference-giving country.
3.b) The Philipines must be eligible for GSP treatment with
respect to the product in question, and
3.c) The origin rules of the importing preference-giving
country applicable to the product must be complied with.
4. To qualify for ASEAN-CEPT treatment.
4.a) The product must be included in the positive list of the
importing ASEAN member state; and
4.b) The origin rules for process goods under the ratio of
60% imported and 40% local have been complied with.
5. To qualify for ACFTA treatment the goods:
5.a) must fall within a description of products eligible for
concessions in the country of destination;
5.b) must ccomply with the condignment cconditions that the
goods must be consigned directly from any ACFTA Member State
to the importing Member State but transport that involves passing
through one or more intermediate non-ACFTA Member States is
also accepted provided that any intermediate transit, transhipment
or temporary storage arises only for geographic reasons or
transportation requirements; and
5.c) must comply with the origin criteria i.e that the origin rule for
process goods under the ratio of 60% parts originating from non-
ACFTA Member States and the aggregate ACFTA content is not
less than 40% have been complied with.
6. To qualify for CO for General Merchandise (White CO)
The export goods shall be categorized under any of the
following circumstances:
6.a) the articles are wholly grown, produced or manufactured
in the Philippines
6.b) The foreign material content of the articles is
ascertainable and therefore it shall be indicated.
6.c) The exact foreign material content is not ascertainable.
However, its estimated value in relation to the ex-factory
price should be indicated.
7. The Bureau s Export Coordination Division, OCOM/ Export
Division of the Port/Subport concerned shall evaluate on
whether or not the export product will qualify for the
issuance of CO under any of the above schemes.
8. If the product is found qualified, the same may upon
request of the exporter concerned be issued CO with or
without preferential tariff treatment, in accordance with
GSP/ASEAN CEPT/ACFTA scheme, and Customs rules,
regulations and procedures.
9. Under no circumstances, however, shall a CO be issued for
products that passed through the Philippine soil merely for
transit purposes.

III Operational Provisions

A. Procedure in the issuance of CO (with Preferential
Treatment)
1. Exporter or would be exporters are advised to request for
the evaluation of their export products, officially in writing, at
least five (5) working days prior to the exportation of the
products, so that the Office concerned where necessary
conduct inspection of said products. The request may be
addressed to:
Chief, Export Coordination Division
Office of the Commissioner
Bureau of Customs, Port of Manila
Or
Chief, Export Division

2. The Export Coordination Division (ECD) /Export Division

(ED) shall, upon request/application of the exporter, issue the
Form A/ Form D, if the origin of the product can be easily
ascertained by its own nature (e.g handwoven abaca
placemat) otherwise the product shall be subject to pre-
exportation verification, and for which purpose ECD/ED shall
furnish the exporter with checklist (copy is attached as
Annex A), together with its attachments, for guidance of the
exporters.
3. The ECD/ED may also take any step necessary, including
plant visits and examination of office books of account and
records, in order to verify the origin of the products in
accordance with the respective GSP/ASEAN/ACFTA Schemes
4. The supporting evidence/papers used for pre-exportation
verification especially the cost breakdown, shall be subject to
periodic review consistent with the prevailing economic
conditions. While said evidence may be used as basis for the
issuance of Form A/Form D/Form E for particular shipment on a
particular time, the same shall not always be construed as also
applicable and binding for another subsequent shipment at a
different future time.
5. In General, the Office which processed the Export
Declarations Issues the corresponding CO, Thus, export
products for:
Manila Loading:
1. Export Division, Port of Manila/ Manila International
Container Port/Ninoy Aquino International Airport.

2. Export Coordination Division, if the ED were processed at

the GTEB-BOC Unit or at the OSEDC, Philtrade.

Provincial Loading:
a. Export Division/Unit of the Port of Loading concerned

b. Export Coordination Division, if the ED were processed

by the same Division.
6. Form A/Form D/Form E shall be issued by the ECD/ED at
the time of exportation or as soon thereafter it the product
has been found to be eligible for preferential treatment.

7. The declaration of the exporter or his authorized signatory

on Form A/ form D Form e shall be supported by ompetent
and valid documents.

B. Required Documents in the Issuance of CO (with or

without Preferential Treatment ):
a.) Clear Exporter Copy of the Export Declaration (ED)
bearing the AUTHORITY TO LOAD and the Control No. of the
Office that processed the said ED.
b.) Clear copy of the Commodity Clearance/Permit to Export
Issued by the Government Agency which clearance to export
the commodity is required. (e.g BFAR/GTEB/BOI/SRA)

c.) Inspector s Certificate of Loading (ICL)

d.) Commercial Invoice

e.) Original Duplicate Non-negotiable copy of Master Bill of

Loading/AWB

f.) Additional requirements:

f.1) For CO Form A- documents which may be required by the

Export Office to prove the originating status of the product.
f.2) For CO Form D- documents to show that the 60/40
requirements have been complied with

C. Procedure in the Retroactive Verification of Imported

Products covered by ASEAN CEPT Form D:

1. Pursuant to the revised CEPT Rules of Origin, the

Philippines, as importing member state may request a
retroactive check at random and or when it has
reasonable doubt as to the authenticity of the document
or as to the accuracy of the information regarding the
true origin of the products in question or of certain parts
thereof.

1.a) The request for retroactive check shall be accompanied

with the Certificate of Origin (CO) concerned and shall
specify the reasons and any additional information
suggesting that the particulars given on the said CO may be
inaccurate, unless the retroactive check is requested on a
random basis.
1.b) Import Office concerned may suspend the provisions on
preferential treatment while awaiting the result of verification.
However, it may release the products to the importer subject
to any administrative measures deemed necessary, provided
thath they are not hed to be subject to import prohibition or
restriction and there is no suspicion of fraud.

1.c) The retroactive check process, including the actual

process and the determination of wether the subject product
is originating or not, should be completed within six months.
While awaiting the results of the retroactive check, Rules 1 b
shall be applied.

2. If the Import Office concerned is not satisfied with the

outcome of the retroactive check, it may, under exceptional
cases, request for verification visits to the exporting Member
state.
2.a) Prior to the conduct of a verification visit, the import
office concerned shall:

(i) Deliver a written notification of its intention to conduct

he verification visit to:
(ii) The exporter/producer whose premisies are to be visited;
(iii) The issuing Authority of the Member State in whose
territory the verification visit is to occur;
(iv) The customs administration of the Member State in
whose territory the verification visit is to occur; and
(v) The importer of the product subject of the verification
visit.

(II) The written notification mentioned in paragraph 2(a)(i)

shall be as comprehensive as possible including, among
others.
(a) The name of the customs administration issuing the
notification
(b) The name of the customs exporter/importer whose
premises are to be visited
(c) The proposed date for the verification visir
(d) The coverage of the proposed verification visit, including
reference to the product subject of the verification; and
(e) Obtain the written consent of the exporter/producer
whose premises are to be visited.

2.b) When a written consent from the exporter/producer is

not obtained within 30 days upon receipt of the notification
pursuant to paragraph 2(a)(i) the notifying import office may
deny preferential treatment to the product that would have
been subject of the verification visit.
2.c) The import office conducting the verification visit shall
provide the exporter/producer whose product is the subject
of the verification and the relevant issuing Authority with a
written determination of whether or not the subject product
qualifies as an originating prodcut.

(i) The determination of whether the product qualifies as an

originating product shall take effect upon receipt of the
written notification by both exporter and producer, and
the relevant issuing Authority. Any suspended
preferential treatment shall be reinstated upon the
effectivity of the determination.
(ii) The exporter/producer will be allowed 30 days from
receipt of the written determination to provide in writing
comments or additional information regarding the eligibility
of the product. If the product is still found to be non-
originating , the final written determination will be
communicated to the issuing Authority within 30 days from
receipt of the comments/additional information from the
exporter/producer.
2.d) The verification visit process, including the actual visit
and determination of whether the subject product is
originating or not, shall be carried out and its results
communicated to the issuing Authorities within a maximum
of six months.

3. The BOC Office concerned shall maintain, in accordance

with its laws, the confidentiality of classified business
information collected in the process of verification and shall
protect that information from disclosure that could prejudice
the competitive position of the person who provided the
information. The classified business information may only be
disclosed to those authorities responsible for the
administration and enforcement of origin determination.